The quality of jobs in this country is fading fast, according to a new report from CIBC.
Released on March 5, CIBC’s latest employment quality index noted job quality in Canada is now at a record low, showing declines in all measures.
According to CIBC, its report indicates that the drop in job quality is “more structural than cyclical in nature and likely can’t be reversed by monetary policy.”
This mirrors the latest warnings from the Bank of Canada cautioning that the headline unemployment rate is not as rosy as perceived, added Benjamin Tal, deputy chief economist at CIBC and the study’s author.
“In many ways, the (Bank of Canada) has a point. Our measure of employment quality is now at a record low, suggesting that the composition of employment is suboptimal,” Tal said. “But a closer examination of the trajectories of our index’s subcomponents suggests that the bank’s prescribed remedy of low and lower interest rates might not cure what ails the labour market.”
Since the 1980s, the number of part-time jobs has risen much faster than the number of full-time jobs, which Tal explained is often seen as the most important measure of employment quality.
Another contributing factor is that self employment versus paid employment was also skewed. Over the past 25 years, the number of self-employed workers has been on a steep decline, but in the last year grew at a rate of four times faster than the number of paid employees.
“While full-time paid-employment jobs are on average of higher quality than part-time and self-employment jobs, not all full-time paid-employment jobs were created equal,” Tal went on to say. “The number of low-paying full-time jobs has risen faster than the number of mid-paying jobs, which in turn, has risen faster than the number of high-paying jobs.”
CIBC’s report also revealed that job quality has already taken a hit in Alberta, falling three per cent by the end of December 2014. Saskatchewan and Manitoba have seen similar declines, with Ontario falling by four per cent. However, British Columbia, the Atlantic provinces and Quebec have bucked the trend and seen an increase in quality.
There are implications for unions, Tal explained, saying that the fastest growing segment of the labour market is also the one with the weakest bargaining power.
“That works to weaken the link between labour market performance and aggregate wage gains,” he added.